If you are married and there is a divorce without a prenuptial agreement, the question of property division quickly becomes important. The focus is often on the home. Among other things, this involves the question of what happens if the house is bought before the marriage and paid off during the marriage. We'll also look at what happens if the house is burdened with loans in the event of a divorce, what the compensation for gains looks like when you own a property solely and what happens to the house in the event of a divorce without a prenuptial agreement.
A spouse brought a house into the marriage – what happens after the divorce?
Who gets the property after the divorce depends, among other things, on the ownership situation. What matters here is who is registered in the land register as the owner.
A fundamental distinction must be made between two variants:
- Only one spouse is the owner: he or she owns the house even after the divorce. There will be no change in ownership structure.
- Both spouses are owners: In this case, both spouses have a claim to the house. What matters here is whether they can agree or not.
The equalization of gains – particularly important in a divorce involving real estate
If two partners get married, they usually legally transfer to the status of an accrued community (§ 1363 BGB). This means that their assets remain separate and that each spouse remains the sole owner of their own assets even during the marriage. If the spouses make gains during the marriage, they must balance them out at the end of the community of gains. This is also referred to as compensation for gains.
In the event of a divorce, this can be expensive for a partner if, for example, B. the property has increased in value and one party is obliged to make significant compensation payments to the other party.
Avoiding the equalization of gains in the event of a divorce is only possible in certain cases, for example if a marriage contract has been concluded that excludes equalization of gains and which stipulates who keeps what in the event of a divorce. Equalization of gains is also excluded if neither spouse requests it or if the marriage only lasts a very short time. Last but not least, there is also the modified gain compensation. The marriage contract stipulates that the equalization of gains only comes into force under certain conditions, such as the birth of a common child or after a certain length of marriage. Certain items can also be contractually excluded from profit compensation.
However, if none of the conditions mentioned apply, then it is not possible to circumvent the compensation for gains. However, there is the possibility of the compensation of gains becoming statute-barred. This occurs after three years. If no court settles the matter during this time, the claim lapses.
Bought a house before marriage and paid it off during marriage – what should I do?
Sometimes it happens that, for example, the man bought a house before the marriage and has already paid off part of it. A further portion is then paid off during the marriage and a remaining debt remains in the event of a divorce. The question then arises as to whether the spouse is entitled to some of the installments paid.
Here it is usually the case that there is no claim to the installments, but rather to the increase in the value of the house between marriage and divorce. Let's assume you bought a house worth €300,000 and you have €200,000 of it as a loan at the beginning of the marriage. In this case, you enter the marriage with initial assets of €100,000.
If there is no separation of property and no other regulations and if one assumes that the house is now debt-free and has a value of €400,000, the partner owns 50% of the €300,000 from payment + increase in value.
What is also crucial here is who is in the land register. If there is only one person in it, this can have an influence on the distribution of values.
Who has to repay the loan in the event of a divorce?
If the house is still encumbered with loans upon divorce, the question arises as to who has to repay the loan. The rule here is that if you take out a real estate loan together, the equalization of gains comes into play.
In principle, the person registered as the borrower is liable for the loan. If only one of the spouses is registered as a borrower in the land register, only he or she is legally obliged to repay the loan. If the loan was taken out by one person before the marriage, the other person does not have to enter into the contract. In order to obtain a co-commitment, a new contract must be concluded.
In the vast majority of cases, both spouses are registered as borrowers and are therefore both obliged to pay off the loan. A spouse moving out due to a divorce does not change this.
There are basically two options when it comes to taking out a loan together. If only one spouse keeps the shared house, the installments can still be repaid together. The person who does not keep the house can have the costs offset against their separation maintenance.
If it is agreed that only one spouse will pay off the loan, the bank's consent is required. Normally a new contract is then drawn up. It should be noted that an early repayment penalty will apply due to the early replacement of the old loan agreement.
The partner moving out will then be removed from the land register. The other person becomes the sole owner.
Divorce costs when owning real estate
Divorces can be very costly for spouses. This is especially true if they last a long time and if ownership of many assets needs to be clarified. Since the divorce costs are based on the procedural value, divorces involving a house are often more expensive. 2 to 5% of the private assets are added to the procedural value. Although there are allowances, these are usually significantly exceeded by the property value.
If the court is supposed to clarify the living conditions in the property in addition to the divorce, this is considered a subsequent matter that also entails further costs.
Both spouses own the property. What to do?
If both spouses are registered as owners, different approaches are possible.
Transfer of ownership and payout
If there is an agreement as to who should keep the property, a transfer of ownership is a comparatively simple route. You go to a notary's office, have the transfer of co-ownership notarized and arrange for a payment. Then one party keeps the house, the other gets the money.
The party who takes over the house should ensure that the takeover takes place in a way that eliminates debts. This means that liabilities such as a registered mortgage are taken into account in the remaining amount.
Real division
The second option is a real division. The shared property is converted to create two separate residential units. Each partner is then the owner of their own unit. The advantage is that both parties keep part of the property and can sell or rent it independently of the other party. The disadvantage, however, is that the property needs to be converted and re-measured. The bank’s consent may also be required. In addition, the property must be large enough so that the prescribed minimum size for the development area is met for both new units.
Ideal division
Unlike real division, an ideal division cannot necessarily be seen from the outside. Here the property remains as it is, the house is only divided into two units. This is possible, for example, with terraced and semi-detached houses.
In the case of an ideal division, both spouses form an ownership community. So you share the entire property and management. This solution can be particularly problematic in the event of disputes, as the former partners have to stay in touch.
Selling the shared house
If both partners cannot agree or neither wants to pay out the other, selling the shared house can be a solution. The prerequisite for this is a mutual willingness to sell and agreement on a minimum sales price.
This is done in the same way as a normal house sale. You commission a valuation, look for a suitable buyer and have the transfer of ownership certified by a notary.
Rental
Renting is particularly practical if you have taken out a loan. The advantage here is that you can repay the loan with the rental income. Unlike when selling a house, there is no early repayment penalty. There are also no costs for changing the land register entry.
Donation
If both parties have a child in common, they can also transfer the house to their child. The prerequisite for this is that they are already of legal age.
Partition auction
If no agreement can be reached on the further use of the property, a division auction can also be considered. However, it should be noted that the actual market value is often far from being achieved.
Conclusion: In the event of a divorce involving real estate, there are various options for disposal
If a house is brought into the marriage, this often represents a major challenge in the event of a divorce. If one of the spouses is entered in the land register as the owner, the situation is usually clear. Things get a little more complicated if the house is encumbered with loans during the divorce, if both partners are in the land register and if the divorce is carried out without a marriage contract. In principle, there are various options for continuing to use or exploit a shared property. The most important are the transfer of ownership and division, the real division, the ideal division, the sale of the shared house, the rental, the donation and the division auction.
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